The Minister in Ecuador ( Long ) to the Secretary of State

No. 500

Sir: With reference to the Department’s instruction No. 112 of May 5, 1939, and previous correspondence, regarding the Ecuadorean Law of March 3, 1939, calculating the exports of mineral earth at only 20 percent of its declared value, I have the honor to inform the Department that, in spite of prior and subsequent oral assurances from members of the Foreign Office, I am in receipt of a note numbered 61 D. C. and dated May 18, 1939, from the Ministry of Foreign Affairs, to the effect that the Law in question is an economic measure, does not affect the Treaty, and applies impartially to all countries.

[Page 619]

An English translation of this self-explanatory note is duly enclosed for the Department’s information.

Respectfully yours,

Boaz Long

The Ecuadoran Minister for Foreign Affairs ( Tobar Donoso ) to the American Minister ( Long )

No. 61 DC

Mr. Minister: The very courteous note No. 45 of the eighth instant from Your Excellency,34 regarding the fulfilment of the Legislative Decree of March 3rd last, which regulates the computation of the commercial balance, in dealing with the exportations of crude petroleum, mineral earth, and gold in bars; and the effects which such regulations might have upon the Trade Agreement signed between Ecuador and the United States of America, was immediately brought to the attention of the Minister of Finance and of the Central Bank, with the recommendation that it be studied prior to any other administrative question.

In conformity with the request of the Foreign Office, the President of the said banking institution, gave me the following reply which I quote:

“Central Bank of Ecuador, Quito, May 16, 1939, No. 3792.

“Dr. Julio Tobar Donoso, Minister for Foreign Affairs, City.

“I have the pleasure of making immediate reply to your courteous note of that Ministry, numbered Mb. 334–DC and dated the fifteenth instant, with which you enclosed the communication from the Minister of the United States of North America to your Ministry, regarding the fulfilment of the Legislative Decree of March 3rd last, concerning the manner of computing the trade balance of the exportations of crude petroleum, mineral earth and gold in bars, and its relation to the Trade Agreement signed between Ecuador and the United States of North America on August 6, 1938. The Ministry under your worthy charge was good enough to quote the said note and to request me to advise you thereon as soon as possible. I can give you my opinion as follows: The above-mentioned Legislative Decree was issued by the last Extraordinary Congress, being based on the fact that, as regards Ecuadorean economy; the exportation of mineral earth and petroleum represents, in reality, a supply of foreign exchange to the country only in the proportion set forth in the said Decree, and I understand that it was the Ministry of Foreign Affairs which promoted the enactment of the Decree in question, for the reasons mentioned. Consequently, the Ministry of Foreign Affairs should maintain, in my opinion, the same reasons in reply to the note of the Minister of the United States. The Legislative Decree of [Page 620] March 3rd last, does not refer expressly to the exportations from Ecuador to the United States, as one might assume from the note of the Minister of that country, but to petroleum, mineral earth, and gold, destined to any country, without any complaint having been received, as far as I know, from any country. While it is certain that, in making the deductions provided for in the Law in question, the figures of exports to the United States may be reduced to the point where it appears that (Ecuador) has an unfavorable trade balance with that country, this situation in perspective has no way changed the preference which the Import Control, under this Bank, observes with respect to the heavy purchases which, generally, are made from the United States, a country heading sales to Ecuador.

Very truly yours,

N. Bonifaz”.

As Your Excellency may confirm, the purpose which inspired the Legislative Decree of March 3rd of this year, is essentially economic and is not concerned with special means of appreciating the various markets which supply themselves with Ecuadorean production. Thus, the provisions constituting the same, do not exclusively or partially affect certain countries, except that their application, of a uniform, general, and absolutely impartial character, creates unfavorable projections in the volume of the trade balance, for all those nations which buy from us products of mineral origin that are set forth in the Decree in question.

Moreover, as the President of the Central Bank well says, the operation of the said Decree has not prevented the normal commercial development between my country and that so worthily represented by Your Excellency; nor has it created any obstacles to the free and favorable issuance of permits for the importation of merchandise from the United States of America.

I avail myself [etc.]

J. Tobar Donoso
  1. See note printed on p. 613.